SAN FRANCISCO (May 20) --– Anyone who wants to claim the title of biggest loser will have to deal first with the legacy of businessman Terrance Watanabe.

In a lawsuit filed last year against Harrah's Entertainment, Watanabe's lawyers acknowledged that the Omaha, Neb., philanthropist had lost the astounding sum of $127 million. But now that his attorneys have examined casino records handed over in discovery, they say he lost far more: a staggering $204 million in a single year at two Harrah's casinos, the Rio and Caesars Palace.

Jae C. Hong, AP
Terrance "Terry" Watanabe, shown here in court on Feb. 18, 2009, lost more than $200 million in a single year at two casinos and could face more than two decades behind bars.

"Nobody's ever lost that much in a commercial casino before," University of Nevada, Las Vegas, professor William Thompson told AOL News. "Nobody ever gambles that much and loses."

For Watanabe, the ordeal continues. His losses include $14.75 million that Harrah's contends he still owes the company. He is scheduled to go on trial July 12 on four felony charges that he passed bad checks when markers he had signed were returned by his bank because of insufficient funds.

He faces as much as 28 years in prison under a unique Nevada law that allows the Clark County district attorney's office to recover a casino's bad debts. The district attorney's office receives a 10 percent cut of any money it recovers.

Watanabe has countered by suing Harrah's in civil court, alleging that it enticed him to take up residence at one of its casinos in 2007 and then made him a virtual captive by keeping him in a perpetual state of intoxication with alcohol and prescription painkillers as it took his money.

He also contends that the casino reneged on a promise to discount his losses by 30 percent, which would have more than offset the $14.75 million he owes.

His attorney, Pierce O'Donnell, said Watanabe takes responsibility for his addictive behavior and is not seeking to recover the money he lost. But he believes the casino should live up to its agreement to discount his losses.

"I am told by everyone we talk to that he is the biggest of the biggest whales," O'Donnell said. "A dubious distinction for sure, but he is not criminal. He is an honest businessman and a great philanthropist."

O'Donnell contends the casino violated Nevada law by allowing Watanabe to gamble while he was intoxicated and plying him with prescription painkillers without a doctor's order.

"They took advantage of his inebriation to defraud him out of tens of millions of dollars," O'Donnell said. "There was a concerted effort from the highest levels of management to keep him gambling. They targeted him and then took advantage of his vulnerabilities. He is the victim here."

O'Donnell also questions the constitutionality of the state law that says uncollected markers are the equivalent of bad checks and allows the district attorney's office to receive a commission for recovering money. The $14.75 million is the largest amount the district attorney's Bad Check Unit has ever attempted to recover.

The Nevada Gaming Control Board began investigating Harrah's treatment of Watanabe after his attorneys filed a complaint with the board.

Harrah's officials declined to discuss any specifics of the Watanabe case, including whether the casino company promised him a discount on his losses or took advantage of his alcohol, drug and gambling addictions.

Harrah's Senior Vice President Jan Jones accused Watanabe and his lawyers of trying to "distract attention" from the criminal charges. "Mr. Watanabe owes Harrah's Entertainment over $14 million, and nothing changes that truth," she said in a brief statement e-mailed by her office.

Thompson, who has long studied the gaming industry, questioned why Harrah's is pursuing criminal charges against Watanabe. Casinos typically negotiate with a high roller who owes a large sum, he said, and are known to write off 25 or 30 percent in exchange for prompt payment.

"It boggles my mind that they would want to make this a criminal charge when the guy has given them that much already," Thompson said. "It just shows our industry is in a greedy position when we are trying to soak a guy for that much."
Thompson said he believes it could give Las Vegas a bad name if Harrah's continues to pursue criminal charges against its best customer. Normally, he said, the casinos like to publicize winners, not losers.

"He's a gambler who probably fell into compulsive behaviors," Thompson said. "We have a lot of them in Vegas. If we start calling them criminals, we really hurt our industry. Harrah's knows who is a compulsive gambler and who is not. They don't throw them out. They offer them free rooms and free meals."